The Justice Department today announced that Village Capital & Investment LLC, a servicer of home loans guaranteed by the Department of Veterans Affairs, will pay over $500,000 to resolve allegations that it failed to properly apply Servicemembers Civil Relief Act (SCRA) interest rate benefits to at least 41 servicemembers’ mortgages and retaliated against servicemembers who requested interest rate benefits.
“When lenders refuse to honor the benefits guaranteed under the Servicemembers Civil Relief Act – or worse, retaliate against those who assert their rights – they not only violate federal law, but undermine the trust that military families place in financial institutions,” said Assistant Attorney General Harmeet K. Dhillon of the Justice Department’s Civil Rights Division. “Today’s action makes clear that such conduct will not be tolerated. We will continue to enforce the law to ensure servicemembers receive the protections they have earned.”
“Protecting our nation’s heroes from unlawful lending practices is a fundamental duty, not an option,” said First Assistant U.S. Attorney Sigal Chattah for the District of Nevada. “By failing to apply the interest rate cap correctly and misrepresenting mortgage terms, Village Capital & Investment LLC breached the trust of servicemembers. This settlement serves as a clear directive to VA home loan servicers everywhere: illegal lending practices that harm servicemembers will be met with swift accountability and strict enforcement.”
Under this settlement, Village Capital will pay at least $425,000 to affected servicemembers. The company will also be required to pay a $79,380 civil penalty, which is the maximum penalty for a first violation of the SCRA. The agreement also requires Village Capital to revise its policies and procedures to prevent future SCRA violations and provide SCRA training to its employees.
The Department alleges that Village Capital violated the SCRA by failing to reduce the interest rate on servicemembers’ pre-service debts to 6% retroactively to the date they received their military orders and by failing to reduce the monthly mortgage payments by the amount of interest forgiven. Village Capital also allegedly misled servicemember borrowers regarding the interest rates on their mortgages, telling them that their interest rate was already below 6% when the rate was in fact above 6%. The Department also alleges that Village Capital violated the SCRA by retaliating against servicemembers who requested interest rate benefits by accelerating the payment of principal on their loans and falsely reporting their mortgages as delinquent to the Department of Veterans Affairs.